Booming demand from Middle East buyers boosted Dubai gold sales value by 38 per cent in May from the same month last year, a top industry executive said.

'The regional offtake was strong last month...and local customers continued to purchase more thanks to stable gold prices,' Tawhid Abdullah, managing director of the Dubai Gold and Jewellery Group, said.

'We have seen a 38 per cent jump in sales value in May and I think this will help sales value in the second quarter to increase by about 40 per cent compared to the same period last year.'

Saudi Arabia and Egypt were among Middle East countries that showed strong demand for Dubai's gold jewellery, Abdullah said.

He said he expected Dubai to see first-half gold sales value rise 35 per cent on the year.

He did not detail the volume of Dubai gold sales.

Some local traders feared gold sales volume in the UAE could fall by about 10 per cent in volume in 2007, as they did in the previous year due to both volatile and high prices.

But industry executives said the regional appetite for gold remains strong despite relatively high prices.

Prices in May were steadier than the same month in 2006, when spot gold bullion hit a 26-year high at $730 an ounce. On Tuesday, the price stood at around $653.

Tax-free jewellery in the UAE's gold souks and shopping malls is a draw for Gulf Arab and Western tourists.

The region's economies grew about 7 per cent in 2006, driven by high oil prices, bringing with it increasing appetite for jewellery.

First-quarter demand in the UAE, a federation of seven emirates which includes Abu Dhabi and trade hub Dubai, rose 5.7 per cent to 29.7 tonnes while sales value jumped 23.9 per cent to $741 million, the World Gold Council said in a report in May. Reuters